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Panel appointed to study state Local Government Aid

A legislative panel will probe state Local Government Aid to cities and make recommendations for a better system.

Senate Taxes Committee Chairman Tom Bakk, DFL-Cook, made his five appointments Friday, joining six from the Minnesota House.

The Local Government Aid Study Group was authorized by the 2008 tax bill, calling for a group of elected and public citizens to analyze the current LGA formula, assessing disparities in funding and ultimately developing recommendations to the Legislature.

The state aid program for cities has been a frequent target of Gov. Tim Pawlenty for reductions, and this year for unallotment of appropriations made by the Legislature. The Republican governor will unallot $$44.6 million in LGA this year and $102.3 million in 2010.

"State aid to Minnesota local governments has been cut by $2.3 billion from 2002 to 2008," Bakk, a 2010 Democratic candidate for governor, said Friday. "Over the same period, Minnesotans' property taxes have increased by $2.7 billion. The Legislature created this study group to analyze the role of LGA and determine how to strengthen the state-local partnership moving forward."

The 2008 tax bill authorized the Legislature to create an LGA study group "to examine the current system of aids to local governments and make recommendations on improvements to the system."

Bakk said Pawlenty has been unwilling to support the Legislature's aim to preserve state aid to local governments in order to keep property taxes down, so the Legislature created the study group to ensure the future of LGA and that property tax issues would be addressed.

Bemidji will lose $210,495 in LGA unallotments this year and $485,688 in 2010.

Pawlenty has said that the unallotments are necessary to balance the state budget, which had a $3 billion gap after he signed the Legislature's spending bills. The cuts are minimal, he said, with cities having to tighten their belts as does the state, and that city reserves are flush enough to cover the aid loss.

He also noted that special treatment is being given to smaller cities, and that no city's aid cut will be more than 3.31 percent of annual aid plus levy for 2009 and 7.64 percent of aid plus levy in 2010.

"The governor's unallotment plan cut another $300 million from city and county budgets, which the non-partisan Revenue commissioner admits will result in at least $238 million in property tax increases statewide," Bakk said. "However, the Legislature has made preparations to have citizens as well as legislators analyze this issue and hopefully arrive at a long-term and more acceptable solution."

Among the Senate's appointees, Sen. Rod Skoe, DFL-Clearbrook, will co-chair the study group.

Other appointees are Sens, Linda Scheid, DFL-Brooklyn Park, and Dave Senjem, R-Rochester, and Cloquet Mayor Bruce Ahlgren, Chatfield City Clerk Joel Young and Steve Peterson of the Coalition of Greater Minnesota Cities.

The House appointees are Reps. Paul Marquart, DFL-Dilworth, Diane Loeffler, DFL-Minneapolis, and Pat Garofalo, R-Farmington, and Minneapolis City Councilor Betsy Hodges, Crystal City Manager Anne Norris and Rachel Walker of the League of Minnesota Cities.

"We are relying on a wide range of state and local elected officials, city staff, as well as other Minnesota citizens with expertise in this area," Bakk said. "Our hope when we created this group was that by including people with such a wide range of experiences, they would generate diverse opinions and develop a comprehensive, responsible plan to move Minnesota forward."

The group will consider disparities in the distribution of LGA, an analysis of the formula used to calculate aid for cities, and volatility in LGA distribution. The group must report on its specific recommendations to the Legislature by Dec. 15, 2010.